Annual Report 2002 - Institute of Private Enterprise Development

Contents

2Mission Statement

3Notice of Meeting

4Corporate Information

5Board of Directors

6Chairman’s Report

8Report of the Directors

10Tables

13Report of the Auditors

14Financial Statements

25Awards

27Achievements 2002

32Donors & Subscribers

2

INSTITUTE OF PRIVATE ENTERPRISE DEVELOPMENT LIMITED

Mission Statement

To develop a national culture ofentrepreneurship.

To provide technical and managerialsupport services through training andcounselling to all loan beneficiaries.

To provide timely financing to micro,small and medium sized businesses in all

geographical areas to enhance theirproduction potential to supply both

local and foreign markets.

To network with organisationsproviding complementary supportservices to communities in order to

effectively developmicro entrepreneurs throughout

Guyana.

To promote the growth anddevelopment of economic activitiesdesigned to improve the social andeconomic welfare of the people ofGuyana through the provision ofbusiness guidance, technicalassistance and non-traditional creditfacilities to micro, small and mediumsized entrepreneurs.

Goals

3

INSTITUTE OF PRIVATE ENTERPRISE DEVELOPMENT LIMITED Annual Report 2002

Notice of Meeting

The seventeenth Annual General Meeting of the Institute of Private Enterprise DevelopmentLimited will be held on Monday 1st December 2003 at the Institute’s Head Office at 253 SouthRoad, Bourda, Georgetown, at 10:00 am.

Agenda

Chairman’s review of the Institute for the year 2002.

To receive and consider the Institute’s Accounts and Reports of the Directorsand Auditors for the year 2002.

To elect Directors in the place of those retiring by rotation.

To appoint Auditors and authorise the Directors to fix their remuneration.

Feature Address.

Presentation of Client’sAwards.

Presentation of Staff Awards

BY ORDER OF THE BOARD

Hemant S. Indar SinghAdmin Manager/Company Secretary

Registered Office253 South Road,Bourda, Georgetown.

31st October, 2003

4


HEAD OFFICE IPED Building253 South Road,Bourda,Georgetown,Guyana.E-mail: [email protected]: www.ipedgy.comTel: (592) 226-4675, 225-8949Fax: (592) 223-7834

BRANCH OFFICES Lot 1 Port Mourant,Corentyne, Berbice.Tel: (592) 336-6171, 337-2160

Lot 11 D’Edward Village,West Bank Berbice.Tel: (592) 330-2592

Lot 312 Parika,East Bank Essequibo.Tel: (592) 260-4399

Lot 54 Access Road,Cotton Field,Essequibo Coast.Tel: (592) 771-4444, 771-4298

AUDITORS Messrs Deloitte & ToucheChartered Accountants77 Brickdam, Stabroek,Georgetown.

BANKERS Demerara Bank Limited

National Bank of Industry andCommerce Limited

Guyana National Co-operative Bank

Citizens Bank Guyana Limited

ATTORNEYS Mr. Vidyanand PersaudGeorgetown

Mr. Murseline BacchusNew Amsterdam

INTERNATIONAL PROJECTS GYBT - Guyana Youth Business TrustCTCS - Caribbean Technological

Consultancy Services, CDBCARTF - Cariforum Agribusiness

Research & Training FundPRCSSP - Poor Rural Communities Support

Services Project

Corporate Information

5


Board of Directors

4

5 6

7

1. Mr. Yesu Persaud C.C.H., F.C.C.A., F.R.S.A., F.B.I.M.Chairman

2. Mr. Komal Samaroo A.A., F.C.C.A., A.C.I.S.DIRECTOR

3. Dr. Ian Mc Donald A.A., M.A.(Cantab), F.R.S.L.DIRECTOR

4. Mrs. Amanda Richards A.I.C.B.DIRECTOR

5. Mr. Laurence Farley F.B.S.C., A .C.E.A.DIRECTOR

6. Dr. Leslie Chin A.A., B.Sc., Ph.D.DIRECTOR

7. Mr. James Morgan F.L.M.I., C.S.DIRECTOR

2 3

1

5

6


T

Chairman’s Report

6

he year 2002 was a very difficult year for the country.It was plagued with an unprecedented crime wave whichseverely affected the business sector as the country continuesto struggle to cope with the economic and political challenges.

The rapid changes taking place in the world today, fuelled bythe forces of globalisation, have had a significant impact ondeveloping economies like Guyana, and adversely affects themany industries in Guyana.

Globally, the developed economies grew by 2% in 2002 whilstinflation was benign.

Guyana is not immune to the above constraints; it is a countrythat is heavily dependent on commodities, the prices of whichcontinued to decline in 2002. The economy of Guyana grew by1.1% in 2002 compared with 1.9% in 2001. The areas of growthwere sugar 15%, the best year for this industry in a very longtime; diamondsupby38%;poultry upby32%andmanufacturingup by 2%. However, growth in the following sectors declined –forestry down by 8%; bauxite down by 7%; gold down by 4%;fish & shrimp down by 4%; rice down by 11% and constructionand engineering down by 4%.

Guyana’s foreign currency earnings totalled US$491M in 2002 compared with US$573M in 1997, a decline of more than 14% in thefive years despite the fact that the volumes of sugar, gold and timber exported were significantly higher in 2002. Expor t revenuewas lower by 8% in 2002 compared with 1997 showing that the economy’s dependence on commodities is overwhelming, theprices of which are beyond the control of producing countries like Guyana.

There is need to shift gears towards the production of goods and services for niche markets. The key to success is a vibrant localand Caricom Market to absorb part of the production of these goods and services to reduce unit costs and ensure that exports arecompetitive in the global market.

Another strategy that would contribute to the growth of the economy is to put some emphasis on expor ts and value addedproduction using as raw materials some of the commodity items we produce. We would have the opportunity to differentiate ourproducts and market them as such.

The country needs security and political stability to create the confidence needed to attract investments to create jobs and wealthfor the people of Guyana.

IPED CONTINUES ITS DEVELOPMENT THRUST

IPED is very proud of its achievement since establishment in 1986. Since its inception, the Institute has funded in excess of 34,000businesses and provided managerial and technical training to thousands of entrepreneurs. It is most gratifying to mention thatover 57% of these businesses are owned by women micro entrepreneurs, many of whom were unemployed and now becomingself sustaining members of society.

YEAR UNDER REVIEW

Despite the many constraints, IPED continues to play a significant role in the development process by the stimulation of theentrepreneurial spirit and the creation of wealth and jobs for our people.

During the year the Institute funded 4,784 entrepreneurs with loans totalling at $720 million, creating and/or sustaining 7,618 jobsand adding value to the economy totalling $4.2 billion. This was quite a significant contribution to Entrepreneurial Developmentand the economy as a whole.


7


The split between small and micro business was as follows:

2002 2001value Value %

loans nos. ($million) nos. ($million) Increase in value

small 1417 525 1411 517 -micro 3367 195 2941 153 27.5

4784 720 4352 670 7.5

Loans to the micro-sector was 70% of total loans granted.

Chairman’s Report

There was just a marginal growth in volume and value in thesmall business sector, but a significant growth in the microsector of 14% in numbers and 27% in value. Micro loans helpthe poorest of the poor to provide incomes for themselves andtheir families and to become self sustaining members of society.Of course, the continuing growth of the sector is dependent ona growing economy.

INCOME

Interest Income declined by 22%. The main reasons were (1)many borrowers had great difficulty carrying on their businessduring the crime wave and (2) treasury bills and deposit accountrates fell to the lowest levels in years.

SURPLUS FOR THE YEAR

The Institute made a surplus of $33.4 million against $47.4million in the preceding year. This decline was for reasonssimilar to those causing the decline in interest and investmentincome.

BAD DEBTS PROVISION

The Directors of the Institute have decided to pursue a prudentpolicy of providing for bad debts since it is operating in areasthat are subject to the vagaries of the weather and the shifts inthe economy. Accordingly, the Institute’s provision is now22% of total debts. The Board is committed to pursue this typeof policy in the future.

TRAINING

IPED continues to offer Managerial and Technical training to allof its Clients. In 2002, over 2700 micro and small entrepreneursreceived training both at IPED training centre and in the field tomake the entrepreneurs more effective and efficient in runningtheir businesses.

The staff of IPED continues to receive in-house training in allaspects – Managerial, Technical and Marketing, to enable themto continue providing service of the highest standard.

INSTITUTIONAL STRENGTHENING

The final component of the IDB Project for InstitutionalStrengthening which is the Management Information System(MIS) will be completed in 2003. This will enable the Instituteto have the most up to date system of financial repor ting andloan por tfolio management.

GEOGRAPHIC COVERAGE

IPED has a Head Office, four Branch Offices and four Sub-offices in the Coastal Regions. There are two Sub-offices atLinden and Kwakwani in Region 10. The activities in Kwakwaniwill be intensified in 2003 and extended to all Hinterland regionse.g. Mabaruma,Port Kaituma, Lethem and Mahdia. IPED wouldthen have a presence in all 10 Administrative Regions ofGuyana.

Only 21% of loans approved were for urban residents whilst79% were rural. IPED is proactive in reaching out to micro-entrepreneurs especially in rural villages and communities.

IPED has disbursed $97 million to farmers and agro-processorsin Regions 2 and 3 under a loan agreement with the Governmentof Guyana for a Poor Rural Communities Suppor t ServicesProject funded by IFAD. This includes $45 million in 2001 (7months). The beneficiaries must not operate more than 4hectares of land and their total household income must notexceed $500,000 per year.

STAFF

The staff continues to perform creditably and is committed togreater efforts in the year 2003 and beyond. The staff is alsoconscious that they have to be extra conscientious andinnovative in the present financial environment.

BOARD OF DIRECTORS

My heartfelt thanks to our hardworking Board of Directors whohave been giving so much of their time, free of any cost indirecting the policies of the Institute and leading it into the newera of financial development.

FUTURE PROSPECTS

IPED is however still dependent on the growth of the economyand we hope the economy will grow in the future so marketscould be created for the micro and small entrepreneurs. IPEDwill proactively identify critical areas for intervention throughloans or technical assistance in order that businesses and theeconomy could bloom.

8


Report of the Directors

The Directors have pleasure in submitting this Repor t and audited Financial Statements, for the year ended 31st December, 2002.

Principal Activities

The Institute of Small Enterprise Development Limited was incorporated on 2nd October, 1985, as a Company Limited byguarantee. It is a non-profit and tax exempt Organisation formed to promote and to encourage the development and growth ofindustry through the provision of business guidance, technical assistance, non-traditional credit facilities to small entrepreneursor to groups and generally to promote and encourage the development and growth of all other economic activities designed toimprove the social and economic welfare of the people of Guyana.

With effect from 10th September, 1991, the entity’s name was changed to Institute of Private Enterprise Development Limited.

The Institute of Private Enterprise Development has been prescribed as an Organisation of National Character in Guyana.

IPED’s New Office Building

In the year 2002, the Institute completed construction of its new office building at 253 South Road, Bourda, Georgetown. Thisthree storey structure will provide a more efficient service to Small and Micro Business Entrepreneurs especially since it willbe serviced by a new Computer Network and Communication System. The upper flat houses the Institute’s EntrepreneurialDevelopment Centre from which entrepreneurs will benefit from IPED’s Business Development Services.

Performance for the year

In the year 2002, the Institute financed a total of 4,784 loans valued at $719.69 million. Small Businesses accounted for 1,417loans valued $524.64 million, whilst 3,367 loans valued $195.05 million were for the Micro Business Sector. The 4,784 loanscreated/sustained 7,618 jobs.

Income totalled $210.57million and Expenditure $177.13 million resulting in a surplus of $33.44 million for the year comparedwith $47.42 million in the year 2001.

In the year 2001, a new loan window came into being that is, the Revolving Loan Scheme, under the PRCSSP (Poor RuralCommunities Support Services Project) which is funded by IFAD. A total of 831 loans with a value of $52.19 million wereprovided in 2002 to Small and Micro Business Entrepreneurs in Regions two and three.

Application of Surplus

Net surplus for the year 2002 was $33.44 million whilst the net accumulated surplus at the end of 2002 was $713.02 million.

Financial/Technical Assistance Received – for 2002

In the year 2002, assistance was received from the following Agencies:

1. The United States Agency for International Development.2. The Inter-American Development Bank.

9


Administration of New Credit Facility

In the year 2002, the Institute continued to administer the PRCSSP (Poor Rural Communities Suppor t Services Project). ThisInternational Fund for Agricultural Development Loan Agreement was signed between the Government of Guyana through theMinistry of Finance and the Institute of Private Enterprise Development Limited on the 9th February, 2001.

Credit Programmes

In the year 2002, the Institute operated three credit windows:

1. Main credit window, which is geared to meet the needs of the Small Business Sector.

2. Micro credit window, which is geared to meet the needs of the Micro Business Sector.

3. The PRCSSP Credit Facility which provides financing to Small and Micro Entrepreneurs in Regions Two and Three.

Entrepreneurial Development

In 2002, the Institute appointed an Entrepreneurial Development Manager who heads the Entrepreneurial Development Centre.The mandate of the Centre is the holistic business development of IPED’s Clients.

Board of Directors

During the year 2002, there were seven (7) Directors on the Board:

1. Mr. Yesu Persaud

2. Mr. Komal Samaroo

3. Dr. Leslie Chin

4. Dr. Ian McDonald

5. Mr. Laurence Farley

6. Mr. James Morgan

7. Mrs. Amanda Richards

Pursuant to the Company’s Ar ticles of Association, the following Directors retire by rotation and are eligible for re-election:

1. Mr. Laurence Farley

2. Mr. James Morgan

Auditors

The retiring Auditors, Messrs Deloitte and Touche, have intimated their willingness to be re-appointed.

Report of the Directors

10


LOAN

STAT

ISTI

CSFO

R19

86TO

DECE

MBE

R20

02

ACTI

VITI

ESTO

TAL

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

ARTI

SAN

ALFI

SHIN

G88

031

4552

4430

6860

5470

7411

280

6954

278

2FO

ODPR

OCES

SIN

G/AG

ROPR

OCES

SING

232

157

615

620

2412

133

1227

3426

45

3SO

FTTO

YS16

00

00

00

00

20

01

00

13

9W

OODE

NTO

YS11

00

03

00

00

00

00

00

14

3

GEN

ERAL

MAN

UFA

CTU

RIN

GGA

RMEN

TS,

FURN

ITU

RECR

AFT,

MIS

C,ET

C.1,

013

7780

8913

478

6853

4130

2055

4473

6954

426

MEC

HAN

ICAL

&OT

HER

WO

RKSH

OPS

401

2428

2118

1528

2225

1813

3040

4850

911

1

DAIR

YFA

RMIN

G27

24

59

35

149

99

419

3958

4527

130

PIGS

&PO

ULTR

YRE

ARIN

G1,

282

132

140

4977

106

170

148

105

5024

3276

8243

3314

1SH

EEP

&GO

ATRE

ARIN

G8

00

10

00

10

60

00

00

00

0BE

EKE

EPIN

G3

00

00

00

00

00

00

12

00

0

LOGG

ING,

SAW

MIL

LING

&CH

ARCO

ALPR

ODU

CTIO

N77

00

40

31

40

1212

2116

40

00

0

GROU

NDPR

OVIS

IONS

,MIX

EDCR

OPS

&RI

CECU

LTIV

ATIO

N6,

595

694

702

335

434

350

634

887

765

619

461

379

217

9314

92

0

MIC

ROEN

TERP

RISE

LOAN

(MIX

EDAC

TIVI

TIES

)22

,018

3,36

72,

941

4,61

04,

023

2,54

443

31,

780

2,01

824

854

00

00

00

0

RURA

LOU

TREA

CHPR

OGRA

MM

E(C

OMM

ERCI

ALAC

TIVI

TIES

)1,

884

440

404

279

306

267

188

00

00

00

00

00

0

TOTA

L34

,692

4,78

44,

352

5,45

55,

057

3,40

41,

624

2,98

83,

029

1,07

766

566

054

046

230

316

510

225

TABL

EI

11


ADM

INIS

TRAT

IVE

ANAL

YSIS

SUM

MAR

YRE

SULT

OFAC

TIVI

TIES

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

NO.O

FLO

ANS

GRAN

TED

4,78

44,

352

5,45

55,

057

3,40

41,

624

2,98

83,

029

1,07

76

65

66

05

40

46

23

03

16

51

02

25

VALU

EOF

LOAN

S(G

$000

)71

9,69

066

9,80

073

9,70

377

0,68

350

0,76

450

4,70

061

7,70

061

1,41

835

3,78

027

3,23

424

0,66

710

3,65

537

,774

17,

239

5,41

92,

100

135

NO.O

FJOB

SCR

EATE

D/SU

STAI

NED

7,61

87,

113

9,68

09,

022

7,12

04,

439

7,18

47,

069

4,06

13,

325

2,90

42,

662

2,66

41,

246

67

54

50

61

AVER

AGE

LOAN

(G$0

00)

150.

415

3.9

135.

615

2.4

147.

131

0.8

206.

720

1.9

328.

541

0.9

346.

61

92

81.8

56.9

32.8

20.6

5.4

ADM

INIS

TRAT

IVEC

OST

PER

LOAN

(G$0

00)

20.2

9520

.701

14.8

1113

.99

15.8

3129

.624

14.2

0111

.575

23.6

430

.687

16.4

8811

.591

4.56

93.

227

2.57

72.

885

4.38

8

AVER

AGE

NO.O

FJO

BSPE

RLO

AN1.

61.

61.

81.

82.

12.

72.

42.

33.

85.

04.

44.

94.

94.

14.

14.

42.

4

LOAN

VALU

EPE

RJO

B(G

$000

)94

.594

.276

.485

.470

.311

3.7

86.0

86.5

87.1

82.2

82.9

38.9

16.7

13.8

8.01

4.66

2.2

CLAS

SIFI

CATI

ONOF

LOAN

RECI

PIEN

TS

CUM

MUL

ATIV

ETO

TAL

2002

2001

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

1989

1988

1987

1986

MEN

9,84

21,

574

1,41

193

01,

072

712

406

747

1,00

924

826

538

136

734

319

987

7318

WOM

EN15

,120

1,47

81,

833

3,68

02,

721

1,83

232

51,

335

1,36

328

373

6844

3220

917

7JO

INT

-M

EN&

WOM

EN9,

730

1,73

21,

108

845

1,26

486

089

390

665

754

632

721

112

987

8469

120

TOTA

L34

,692

4,78

44,

352

5,45

55,

057

3,40

41,

624

2,98

83,

029

1,07

766

566

054

046

230

316

510

225

TABL

EII

TABL

EIII

12


GEOGRAPHICAL DISTRIBUTION OF SMALL LOANS IN 2002

GEOGRAPHICAL DISTRIBUTION OF MICRO LOANS 2002

East Berbice

West Berbice

East Coast Demerara

East Bank Demerara

West Demerara

East Bank Essequibo

Essequibo Coast

Georgetown

New Amsterdam

Linden3,367 Micro Loans

East Berbice

West Berbice

East Coast Demerara

East Bank Demerara

West Demerara

East Bank Essequibo

Essequibo Coast

Georgetown

New Amsterdam

Linden1, 417 Small Loans

13


TO THE MEMBERS OFTHE INSTITUTE OF PRIVATE ENTERPRISE DEVELOPMENT LIMITED

ON THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2002

We have audited the financial statements set out on pages 14 to 23. These financialstatements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.

We have conducted our audit in accordance with generally accepted auditingstandards. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements give a true and fair view, in all materialrespects, the state of affairs of the Company at 31 December 2002 and of theresults of its operations and cash flows for the year then ended and comply with theCompanies Act 1991.

DELOITTE & TOUCHECHARTERED ACCOUNTANTS

77 Brickdam,Stabroek, Georgetown,Guyana.

25 July 2003

Report of the Auditors

14


Income and Expenditure AccountFOR THE YEAR ENDED 31 DECEMBER 2002

Notes 2002 2001G$ G$ G$ G$

Income

Interest 132,033,602 170,200,588Investment income 53,567,708 71,992,290Other income 24,966,467 24,726,921

210,567,777 266,919,799

Expenditure

Interest 22,608,700 22,608,700Salaries and allowances 48,456,328 43,331,499Provision for doubtful debts 47,736,440 98,470,103Depreciation 9,692,826 8,320,815Printing and stationery 4,865,747 3,754,310Repairs and maintenance 3,161,188 4,009,569Others 40,608,903 38,998,888

177,130,132 219,493,884

Net surplus of income overexpenditure 3 33,437,645 47,425,915

“The accompanying notes form an integral part of these financial statements.”

15


Members’ Capital Accumulatedsubscriptions donations surplus Total

G$ G$ G$ G$

Balance at 31 December 2000 32,500 247,366,640 632,424,286 879,823,426

Net surplus −−−−− −−−−− 47,425,915 47,425,915

Donations received −−−−− 12,491,808 −−−−− 12,491,808

Donations adjusted (Note 7) −−−−− (17,763,922) −−−−− (17,763,922)


Net surplus −−−−− −−−−− 33,437,645 33,437,645


“The accompanying notes form an integral part of these financial statements.”

Statement of Changes in EquityFOR THE YEAR ENDED 31 DECEMBER 2002

16


Notes 2002 2001G$ G$

ASSETSNon-current assets

Fixed assets 4 109,854,657 81,354,098Non-current loans receivable 5 152,299,350 196,455,150

262,154,007 277,809,248Current assets

Loans receivable 5 577,700,534 547,367,621Debtors 17,389,148 11,219,246Pre-payments −−−−− 883,868Stores 769,040 2,531,401Fixed deposits 421,755,781 459,489,217Short term investment 6 452,636,039 392,349,512Cash on hand and at bank 143,064,871 50,819,140

1,613,315,413 1,464,660,005

TOTAL ASSETS 1,875,469,420 1,742,469,253

EQUITY AND LIABILITIESCapital fund

Members’ subscriptions 32,500 32,500Capital donations 7 242,094,526 242,094,526Accumulated surplus 713,287,846 679,850,201

955,414,872 921,977,227Non-current liabilitiesLoans due after one year 8 376,740,066 343,148,037

Current liabilities

Sundry creditors 9 283,342,454 250,920,730Accruals 2,008,769 5,586,928Loans due within one year 8 257,963,259 220,836,331

543,314,482 477,343,989

TOTAL EQUITY AND LIABILITIES 1,875,469,420 1,742,469,253

On behalf of the Board:

………………………………… Director ………………………………… Director

Balance SheetAT31DECEMBER2002

“The accompanying notes form an integral part of these financial statements”.

Mr. Yesu Persaud Dr. Leslie Chin

17


2002 2001G$ G$

Net surplus of income over expenditure 33,437,645 47,425,915

Adjustments for:Depreciation 9,692,826 8,320,815Loss on disposal of fixed assets −−−−− 3,800,557

Operating surplus before working capital changes 43,130,471 59,547,287

(Increase)/decrease in non-current loans receivable 44,155,800 (74,435,400)(Increase)/decrease in current loans receivable (30,332,913) 192,063,485Increase in debtors and prepayments (5,286,034) (4,315,630)Decrease in stores 1,762,361 1,628,136Increase in creditors and accruals 28,843,565 23,594,637

Net cash provided by operating activities 82,273,250 198,082,515

Investing activities:Proceeds on sale of fixed assets −−−−− 1,500,000Purchase and donations of fixed assets (38,193,385) (22,909,191)

Net cash used in investing activities (38,193,385) (21,409,191)

Financing activitiesCapital donations adjustment −−−−− (17,763,922)Capital donations −−−−− 12,491,808Loan drawndown 79,530,349 32,435,438Loan repayments (8,811,392) (8,810,492)

Net cash provided by financing activities 70,718,957 18,352,832

Net increase in cash and cash equivalents 114,798,822 195,026,156Cash and cash equivalents at beginning of period 902,657,869 707,631,713

Cash and cash equivalents at end of period 1,017,456,691 902,657,869

Analysis of changes in cash and cash equivalents

Movement2002 2001 for the year

G$ G$ G$

Cash in hand and at bank 143,064,871 50,819,140 92,245,731Fixed deposits 421,755,781 459,489,217 (37,733,436)Other investments 452,636,039 392,349,512 60,286,527

1,017,456,691 902,657,869 114,798,822

Cash Flow StatementFOR THE YEAR ENDED 31 DECEMBER 2002

18


1. Significant accounting policies

(a) Accounting convention

The financial statements have been prepared under the historical cost convention and the accounting policiesconform with International Accounting Standards adopted by the Institute of Chartered Accountants of Guyana.

(b) Depreciation

Depreciation of fixed assets is on the straight line method calculated at the rates specified below which areestimated to write off the assets over their expected useful lives, viz:-

Building - 2%Office furniture - 15%Fixtures and fittings - 15%Office machinery and equipment - 20%Motor vehicles - 25%Computers - 25%

(c) Translation of foreign currencies

Foreign currency transactions completed during the year are translated at the rates of exchange at the date of eachtransaction. At balance sheet date, all assets and liabilities denominated in foreign currencies are translated atthe rates of exchange in effect on that date or as agreed by Bank of Guyana. Gains/losses are accounted for inthe income and expenditure account.

(d) Loans receivable and interest

Loans are stated net of unearned and uncollected interest and of any provisions established to recogniseanticipated losses.

Provision for the loan losses which is specific and based on appraisals of the credit por tfolio, represents theamount which in management’s judgement is necessary to maintain the provision at an appropriate level. Thisjudgement is based on cur rent delinquencies, the nature and characteristics of the portfolio and generaleconomic conditions and trends.

A non-per forming loan is any loan where repayments have not been adequate to cover the interest for the year.In addition, other loans which are not yet in arrears may be classified by management as non-performing wherein management’s opinion there is doubt as to the ultimate collectibility of some portion of principal or interest.

(e) Pension funding

The Company par ticipates in a defined benefit plan for its employees. The contributions are held in trusteeadministered funds which are separate from the Company’s resources. Twenty-nine (2001 – thir ty one)employees par ticipate in this plan.

During the year, the Company’s contribution to the Scheme was $2,270,051 ($1,748,957 – 2001).

The last actuarial valuation which was done at 31 December 2000, showed a past service surplus of $90.6Mwith a funding level (i.e. ratio of assets to liabilities) of 123%.

The principal actuarial assumptions used were as follows:

Investment return - 7% per annumSalaries increases - 7% per annumPension increases - 3% per annum

Notes on the Accounts

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1. Significant accounting policies (cont’d)

(e) Pension Funding (cont’d)

In relation to the current status of the Plan, the company estimates that there would be insignificant (if any) netbenefit obligations after taking into account the fair value of the plan assets. Also, the current service cost is afair reflection of the cost to the company.

An actuarial valuation is in progress and when completed in 2003 would further reveal the funding status of thePlan.

2. Incorporation and activities

The Institute of Small Enterprise Development Limited was incorporated on 2 October 1985 as a company limited byguarantee. It is a non-profit and tax exempt organisation formed to promote and to encourage the development andgrowth of industry through the provision of business guidance, technical assistance, non-traditional credit facilities tosmall entrepreneurs or to groups and generally to promote and encourage the development and growth of all othereconomic activities designed to improve the social and economic welfare of the people of Guyana.

With effect from 10 September 1991 the entity’s name was changed to Institute of Private Enterprise DevelopmentLimited.

2002 2001G$ G$

3. Net surplus of income over expenditure 33,437,645 47,425,915

After charging:

Depreciation 9,692,826 8,320,815Auditors’ remuneraiton 315,000 315,000

4. Fixed assetsFurniture,fixtures Sundry

Land and Motor and Office training Computer Computer Work-in-buildings vehicles fittings machinery equipment equipment software progress Total

G$ G$ G$ G$ G$ G$ G$ G$ G$CostAt 1 January 2002 65,348,481 11,258,089 3,726,763 8,735,225 6,083,842 13,964,072 −−−−− 16,443,895 125,560,367Additions and donations 18,514,053 2,003,750 5,575,170 4,733,786 −−−−− 6,560,226 806,400 −−−−− 38,193,385Transfer 9,494,880 −−−−− −−−−− −−−−− −−−−− −−−−− 6,949,015 (16,443,895) −−−−−

At 31 December 2002 93,357,414 13,261,839 9,301,933 13,469,011 6,083,842 20,524,298 7,755,415 −−−−− 163,753,752

Depreciation

At 1 January 2002 6,387,002 11,258,089 2,920,579 6,862,717 5,510,339 11,267,543 −−−−− −−−−− 44,206,269Charge for the year 1,867,148 49,738 781,248 1,304,155 573,503 3,178,180 1,938,854 −−−−− 9,692,826

At 31 December 2002 8,254,150 11,307,827 3,701,827 8,166,872 6,083,842 14,445,723 1,938,854 −−−−− 53,899,095

Net book values:

At 31 December 2002 85,103,264 1,954,012 5,600,106 5,302,139 −−−−− 6,078,575 5,816,561 −−−−− 109,854,657

At 31 December 2001 58,961,479 −−−−− 806,184 1,872,507 573,503 2,696,530 −−−−− 16,443,895 81,354,098


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5. Loans receivable2002 2001

G$ G$

Gross loans 940,633,423 906,719,870Less provision for bad debts 210,633,539 162,897,099

729,999,884 743,822,771

Non-current loans receivable 152,299,350 196,455,150Current loans receivable 577,700,534 547,367,621

729,999,884 743,822,771

Non-per forming loans receivable 149,386,796 193,833,845Per forming loans receivable 580,613,088 549,988,926

729,999,884 743,822,771Provision for doubtful accounts

At 1 January 162,897,099 64,897,095Provision for the year 47,736,440 98,470,103Bad debts written off −−−−− (470,099)

At 31 December 210,633,539 162,897,099

6. Short term investment 452,636,039 392,349,512

7. Capital donations

At 1 January 242,094,526 247,366,640Donations received during the year −−−−− 12,491,808GYBT written off (Note) −−−−− (17,763,922)

At 31 December 242,094,526 242,094,526

(a) Capital donations received are used to extend credit to micro enterprises for the purpose of providing support for theincrease of the productivity and employment generation of the micro enterprises sector. These donations are notrepayable to the donor agencies.

(b) This represents an adjustment to donations as a result of separating and maintaining the financial statements of theGuyana Youth Business Trust as a separate entity.


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8. LoansAmount

2002 2001 CommittedG$ G$

(i) PL 480 1986 2,800,000 2,800,000 G$ 2,800,000PL 480 1987 5,500,000 5,500,000 G$ 5,500,000PL 480 1988/89 27,000,000 27,000,000 G$ 27,000,000PL 480 1990 43,400,000 43,400,000 G$ 43,400,000PL 480 1991 103,500,000 103,500,000 G$ 103,500,000PL 480 1992 255,345,000 255,345,000 G$ 255,345,000

(ii) IADB 21,432,935 22,274,377 SFR 375,000(iii) EIB 71,139,603 71,729,553 ECU 500,000(iv) IFAD 104,585,787 32,435,438 SDR 1,350,000

Total 634,703,325 563,984,368

2002 2001G$ G$

Repayments due after five years 191,510,764 159,394,739Repayments due within two to five years 185,229,302 183,753,298

376,740,066 343,148,037Repayments due within one year 257,963,259 220,836,331

634,703,325 563,984,368

(i) PL 480Repayment Interest

Period Moratorium RateYear Years Years %

1986 10 5 41987 10 5 41988/89 15 5 41990 15 5 41991 15 5 41992 10 5 6

Annual repayments become due at the end of the sixth year.

(ii) IADB

Inter-American Development Bank loan of 375,000 Swiss Francs was fully drawn down as at 31 December 1993.The loan is repayable not later than 16 January 2028 by 60 semi-annual consecutive, and as far as possible equalinstalments beginning on 16 July 1998.

Commission of 1% is payable semi annually on 16 January and 16 July each year beginning 6 months after thedisbursements of the loan. The terms of the IADB/IPED agreement require that this loan is repayable in Guyanadollars at the rate of exchange agreed by the Bank of Guyana at the date of disbursement.


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8. Loans (cont’d)

(iii) EIB

European Investment Bank loan of 500,000 ECU was fully drawn down at 31 December 2000. The loan is repayablein 10 equal annual instalments commencing 31 March 2001.

Interest is payable annually in arrears at the rate of 2% per annum.

(iv) IFAD

The International Fund for Agricultural Development loan agreement was signed between the Government of Guyanathrough the Ministry of Finance and the Institute of Private Enterprise Development Limited on 9 February 2001.

This is an interest free loan which is repayable after six (6) years, after which IPED is entitled to repay theGovernment all undisbursed sums and within an agreed stipulated period recover the disbursed sums and pay themover to the Government of Guyana. The Government is entitled to 2% interest collected as government commission.The full commitment on this loan has not been received.

9. Sundry creditors2002 2001

G$ G$

PL 480 loan interest 240,610,208 218,001,508Others 42,732,246 32,919,222

283,342,454 250,920,730

10. Related party transactions

(a) The company shares a common Chairman with Trust Company (Guyana) Limited, and Demerara Bank Limited.

Balances were as follows:2002 2001

G$ G$

Trust Company (Guyana) Limited - fixed deposits 793,485,109 539,917,401

Demerara Bank Limited - current account 12,367,629 12,677,599

Demerara Bank Limited - savings account 56,348,580 −−−−−

Interest rates were same as for third parties

(b) Macro and minor loans were taken by ten (10) staffat the prescribed regular rates of interest 2,566,440 2,114,495

(c ) The Company’s fixed assets are insured by DiamondFire Insurance Company Limited, a company that hasa common Director with IPED. Insured value wasG$26,953,274 in 2002 (2001 - G$26,953,274). 107,813 107,813

(d) Balance due from Guyana Youth Business Trustwhich shares a common Chairman and Trusteewith IPED. 3,978,341 3,451,791


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11. Loans receivable by Industry2002 2001

G$ G$

Fishing 54,252,036 52,139,609Rice 286,879,602 271,111,946Dairy 5,082,899 2,794,677Pigs 643,469 409,646Workshop 22,539,095 17,503,693Crops 65,735,063 74,292,658Garment 5,595,341 8,552,571Food processing 28,633,190 26,668,925Furniture 41,052,949 42,139,810Poultry 39,230,755 37,649,841Fish dehydration 1,972,033 1,428,184Craft 2,978,469 1,720,430Shop, motor vehicles & vessels, vending andtrading, etc. 386,038,522 370,307,880

940,633,423 906,719,870

Less: Bad debts provision 210,633,539 162,897,099

729,999,884 743,822,771

12. Capital commitments

Approved but not contracted for −−−−− 9,656,191

Approved and contracted for 11,000,000 −−−−−

13. Pending litigations

There are several litigations pending, the outcome of which is uncertain at this stage.

14. Reclassifications

Cer tain reclassifications were made to the 2001 financial statements to conform with the 2002 presentation.


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CLIENTS’ AWARD 2002

Best Managed Project ANIRHU RACHPAULLot 14 & 15 Section A, Bush Lot, West Coast Berbice.

Runner-upSARABJEET JAIKARANVigilance Public Road, East Coast Demerara.

Best Woman Entrepreneur BHAGWANDAI HARRICHANDLot 205 Good Hope, East Coast Demerara.

Runner-upINA & ABBEANA RICHMOND1 Perth Village, Mahaicony, East Coast Demerara.

Best Agricultural Project KHEMRAJ KARUCane Grove, Mahaica, East Coast Demerara.

Runner-upKHEMHARSHAN BABULALLLot 3, No. 46 Village, Corentyne, Berbice.

Best Manufacturer NATERAM RAMNANANCharity, Essequibo Coast.

Runner-upBOODHNARINE NARINELot 213, No. 72 Village, Corentyne, Berbice.

Enterprising Micro Entrepreneurs CHRISTINA SMITHBush Lot, Essequibo Coast.

ASHTON ANTIGUALot 73 Block No. 22, One Mile Wismar,Linden.

DONNA O. HETMYERLot 47 Stewartville, West Coast Demerara.

LARRY INGLANTON406 East Ruimveldt, Housing Scheme,Georgetown.

KWALLIEE & GANGA SALYEKRAMLot 1 Section ‘C’ Clonbrook, East Coast Demerara.

MEGAN ROSSNo. 28 Village, West Coast Berbice.

Names Designations Years of Service

Hemant S. Indar Singh Admin Manager/Company Secretary 10

Juanita Critchlow Legal Clerk 5

Gupta Molai Business Counsellor/Field Officer 5

Raghunandan Pancham Business Counsellor/Field Officer 5

Chaitram Security Officer 5

Employees who completed ten and five years of continuous employment in 2002:

The Institute of Private Enterprise Development which was incorporated on 2nd October,1985, held its Sixteenth Annual General Meeting on 2nd December, 2002, at the Le MeridienPegasus Hotel. The guest speaker was His Excellency The President of Guyana Mr. BharatJagdeo.

Picture above shows the President addressing the gathering which comprised of membersof the Diplomatic Corp., representatives of donor agencies, other distinguished guests,business Entrepreneurs and well wishers.

Achievements

The Institute has benefited tremendously over the years with financial assistance from theUnited States Agency for International Development (USAID). This takes the form of loansand grants to support IPED’s drive to assist small and micro entrepreneurs in wealthcreation and employment generation.

The feature address of the Institute’s Sixteenth Annual General Meeting which was held on2nd December, 2002, was delivered by Dr. Mike Sarhan, Mission Director, for the USAIDoffice in Georgetown, Guyana.

In picture above, can be seen Dr. Sarhan, delivering his address.

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Achievements

The Institute acknowledges the contributions made by Micro Entrepreneurs, moreso, Womenin the Development of the Micro Business sector. As such, IPED has disbursed over 22,000Micro Loans, since the launching of its Micro Credit Facility in 1993. A communitywhich continues to benefit from the Institute’s Micro Credit Facility is the Mining Town ofLinden and its environs.

The above picture shows a woman Micro Entrepreneur, Ms. Janet Henry of 267 SouthAmelia’s Ward, Linden, receiving an award from the Chairman of IPED, Mr. Yesu Persaud,for her sterling contribution to the Micro Sector.

At the awards presentation at the Institute’s Annual General Meeting held on 2nd December,2002, Mr MohamedAli of No11 Village ,West Coast Berbice ,was awarded for having thebest Agricultural Project.

In picture above can be seen MrAli receiving his Award from the United States Ambassadorto Guyana, Mr Ronald Godard.

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Achievements

Over the years the Institute of Private Enterprise Development has been awardingemployees for long service and dedication.

Presently, the Institute creates employment for over sixty (60) persons, of which SeniorLegal Clerk, Mrs. Monica Richards, is one of the longest serving employees.

In picture above, can be seen Mrs. Richards receiving an award from the Chairman ofIPED, Mr. Yesu Persaud for completing ten (10) years of service with the Institute in2001. This presentation was made at the Institute’s sixteenthAnnual General Meetingheld in 2002 at the Pegasus Hotel.

Since it is a National Development Institution, the Institute’s main thrust is to make its services available to Small and MicroEntrepeneurs in all ten Regions of Guyana. During 2002, the Institute continues to fund entrepeneurs in Regions two, three, four,five, six, seven and ten and plans to extend its services to Regions one, eight and nine in 2003. In the latter half of 2002, the Instituteventured into Kwakwani to address the needs of residents who are affected as a result of the downsizing of the mining operationsat Linden.

One of the projects which IPED hopes to fund in 2003, is the establishment of a Petrol Station. The site for this venture has alreadybeen identified and will be along the Kwakwani Public Road. In the above picture can be seen the site for the Petrol Station wheresome preparatory work has already been done.

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Achievements

The Institute of Private Enterprise Development commenced business in April 1986, from a rentedoffice at 240 Camp Street, Georgetown. In 1990 the Institute established its own office at 253 SouthRoad, Bourda, Georgetown, where it operated until June, 1996. With the unprecedented growth of theInstitute, it was forced to seek additional office space for its operations which was met with thepurchase of the building next door at 254 South Road, Bourda. This the Institute occupied from July,1996 to December, 2002

However, with the view to improve and expand its services to take on the ever-increasing challenges,the Institute completed construction of its new office at 253 South Road, Bourda in 2002. This it hopesto occupy in January, 2003.

In the above picture can be seen IPED’s new office building at 253 South Road, Bourda, Georgetown.

The Institute also has offices at Lot 1 Port Mourant, Corentyne, Lot 52 Cotton Field, Essequibo Coast,Lot 312 Parika and Lot 11 D’Edward, West Bank Berbice.

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Donors & Subscribers

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FOREIGN COMPANIES

Foundation for International Training – CanadaInter-American Development BankPanAmerican Development Foundation – USACommonwealth Development CorporationSeagrams Ltd UKBookers Sugar Company Ltd – U.K.TexacoWest Indies Ltd.West India Trading Company – CanadaBretenstein LtdW. – Holland

INDIVIDUALS

Stoll,WilfredG. – Company DirectorAckloo, RaymondA. F. – Company DirectorBlake, Byron – Director, Economics & Industry

Division, Caricom SecretariatBrassington, Michael,A. – Company DirectorPancheo, Fernandes – BusinessmanLuthers, Cecil – BusinessmanPersaid, Shirley – BusinesswomanPersaud, Yesu – Company DirectorPillai,R.C. – Licensed AuctionerRainford, Roderick – Secretary GeneralSamaroo, Komal R. – Company DirectorSue-A-Quan, R. – BusinessmanViolaBurnham – WRSMAubrey Henry – BusinessmanHaimwant Budhram – BusinessmanPremroop Prashad – BusinessmanDoodnauth Samaroo – Businessman

EMBASSIES/INSTITUTIONS

European UnionCaribbean Development BankIndian High CommissionGerman EmbassyCanadian High CommissionEmbassy of the United States of AmericaBritish High CommissionUnited Nations Development Programme

LOCALORGANISATIONS&COMPANIES

Department of International Economic CooperationGovernment of Guyana-Ministry of FinanceGuyana Manufacturing Industrial DevelopmentAgencyBank of Nova ScotiaGuyana Bank for Trade & Industry Ltd.Guyana Co-operativeAgricultural & Industrial DevelopmentBankGuyana National Co-operative BankNational Bank of Industry and Commerce Ltd.Caribbean Chemicals (Guyana) Ltd.A.H. & L. KissoonGuyana Volunteer Consultancy Inc.

LOCALORGANISATIONS&COMPANIES

The Hand-in-Hand Mutual Fire & LifeAssurance CompaniesLtd.Trust Company Guyana LimitedVincent Persaud & SonsGuyoilThe Guyana &Trinidad Mutual Fire & LifeAssuranceCompanies Ltd.The Demerara Mutual LifeAssurance Society Ltd.Guyana Sugar CorporationGuyana National Trading CorporationGuyana Housing Development CorporationGuyana Pharmaceutical CorporationGuyana National ServiceGuyenterprise Advertising AgencyCreative Advertising AgencyGuyana Refrigerators Ltd.Guyana Stores Ltd.Guyana Wood Products Ltd.Industrial Engineering Ltd.A.Mazaharally & Sons Ltd.N. C. E. Screen Printers Ltd.National Edible Oil Company Ltd.New Building SocietyToolsie Persaud Ltd.Vanceram Ltd.Dharamdeo Sawh Ltd.Vinelli Industries Ltd.Willems Timbers & Trading Company Ltd.T. Geddes Grant (Guyana) Ltd.Gafsons Industries Ltd.Fries Furniture Manufacturing CompanyJohn Fernandes Ltd.DemeraraTobacco Co. Ltd.Descom Enterprise Ltd.Demerara Distillers Ltd.Continental Industries Ltd.C & F Meat Centre Ltd.B.E.V. Enterprise Ltd.Besto Feed FactoryBauxite Industry Development Company Ltd.Bata Shoe Company (Guyana) LimitedBaracellos EnterprisesBanks DIH Ltd.Associated Industries Ltd.Abdools Ltd.G.E.B Security ServicesGeorge Henry AssociatesDavid Klautky AssociatesDeloitte & ToucheBrassAluminium & Cast Iron Foundry Ltd.Mings Products & Services Ltd.Guyana Stockfeeds Inc.Demerara Bank LimitedFarfan & Mendes Ltd.Fullworks Motor SparesWharton’s EnterpriseGuyana Rice Development Board


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Notes

Printed by SH PRINT SHOPE-mail: [email protected]

Notes

Documents

Annual Report 2002 - Institute of Private Enterprise Development